"Individuals can determine their Social Security disability benefits using Allsup's free online Social Security benefits calculator."
The fourth quarter 2012 unemployment rate for people with disabilities dropped to its lowest level since the fourth quarter of 2008. The number of people with disabilities applying for Social Security Disability Insurance (SSDI) also reached a four-year low, according to a study by Allsup, a nationwide provider of SSDI representation and Medicare plan selection services.
While this may seem to indicate that the worst of the economic crisis has passed, the unemployment rate for people with disabilities was still 70 percent higher than for those with no disabilities during the fourth quarter of 2012, according to the Allsup Disability Study: Income at Risk. The full study is available at www.allsup.com/Portals/4/allsup-study-income-at-risk-q4-12.pdf.
Specifically, the unemployment rate averaged 12.4 percent for people with disabilities and 7.3 percent for people with no disabilities during the fourth quarter of 2012. This compares to 13.7 percent for people with disabilities and 7.9 percent for people with no disabilities during the third quarter of 2012. These figures are based on non-seasonally adjusted data from the U.S. Bureau of Labor Statistics.
"The discrepancy in the employment rate between people with no disabilities and people with disabilities is concerning," said Tricia Blazier, personal financial planning manager for Allsup. "If more people with disabilities capable of working were provided the opportunity to do so, the trust fund for the Social Security disability program would be stronger. These individuals would be paying into the trust fund just as other workers do."
Beginning in 2013, the projected assets of the Disability Insurance Trust Fund will fall below 100 percent of the annual costs, according to the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (2012 OASDI Trustees Report). The DI Trust Fund is projected to exhaust its reserves in 2016.
At that time, revenues from payroll taxes will cover only 79 percent of benefits. This means there would be a 21 percent cut in benefits to the millions of people with disabilities so severe they are unable to work, as well as to their families. At year-end 2012, more than 8.8 million disabled workers received an average monthly benefit of $1,130.34, and nearly 2.1 million children and spouses of disabled workers relied on average monthly benefits of nearly $334.
SSDI Applications Continue to Decline
While the unemployment rate for people with disabilities is still significantly higher than for people with no disabilities, the number of people with disabilities applying for SSDI has declined for the second year in a row.
The Allsup Disability Study: Income at Risk shows that 638,223 people with disabilities applied for SSDI during the fourth quarter of 2012, down from 726,026 for the previous quarter. The quarterly number of applications has not dropped below this level since the fourth quarter of 2008, when there were 577,306 applications.
In 2012, 2.82 million people filed SSDI applications, compared to 2.88 million in 2011. Applications are now down 3.92 percent from the record high of nearly 2.94 million SSDI applications in 2010. The average age of people applying for SSDI is 53.
"The average age of SSDI applicants is about midway in the baby boom generation, so it's likely SSDI applications will remain elevated," Blazier said. "Because of this, more is needed to educate people with severe disabilities about their SSDI benefits. It's also important people understand their options for rejoining the labor pool if their condition improves in the future."
Many people confronted with a disabling condition wait longer than they should to apply for SSDI benefits. Often, Social Security disability applicants must wait several months or years before they receive their benefits. For example, nearly 1.89 million SSDI claims are pending with an average cumulative wait time of more than 800 days, according to Allsup's analysis of the Social Security disability backlog.
Blazier recommends individuals understand the following:
1. Who is covered by Social Security disability insurance
To be covered, a person must have worked and paid into the SSDI program through payroll taxes (FICA) for five of the last 10 years. They also must be disabled before reaching full-retirement age (65-67) and must meet Social Security's definition of disability. Generally, this means being unable to work because of a verifiable mental or physical impairment expected to result in death, or which has lasted, or is expected to last, for at least 12 months.
2. When should someone with a severe disability apply for SSDI benefits
Anyone with SSDI coverage who is unable to work because of a severe disability expected to last 12 months or longer or is terminal should apply as soon as possible. It can take two to four years to receive benefits, during which time many people struggle financially as a result of lost income and, often, mounting healthcare costs. The sooner someone applies the sooner he or she may begin to receive monthly benefits. They also are eligible for Medicare 24 months after they start receiving SSDI cash benefits.
3. Is SSDI representation needed
Individuals can apply for SSDI on their own. However, there are several advantages to having a Social Security disability representative. This is especially true at the initial application. For example, more than half of Allsup claimants are awarded benefits at the initial application level compared to just 34 percent nationally.
4. Can someone with SSDI benefits ever return to work
Yes. If a person's condition improves to the point where they can return to work, Social Security offers a trial work period, which allows someone to test their ability to work over at least nine months and receive full SSDI benefits no matter how high their earnings. In addition, Social Security's work incentives include the extended period of eligibility, which lasts 36 months. Once someone's benefits stop because they have substantial earnings, they still have five years in which benefits can be reinstated without going through the SSDI application process again - if they must stop working because of their disability. This is known as expedited reinstatement. Additionally, it's possible to continue Medicare coverage for up to 93 months.
Individuals can determine their Social Security disability benefits using Allsup's free online Social Security benefits calculator. For a free evaluation, or for more information about eligibility for Social Security disability benefits, contact Allsup's Disability Evaluation Center at (800) 678-3276.
Allsup is a nationwide provider of Social Security disability, veterans disability appeal, Medicare and Medicare Secondary Payer compliance services for individuals, employers and insurance carriers. Founded in 1984, Allsup employs more than 800 professionals who deliver specialized services supporting people with disabilities and seniors so they may lead lives that are as financially secure and as healthy as possible. The company is based in Belleville, Ill., near St. Louis. For more information, go to www.Allsup.com or visit Allsup on Facebook at www.facebook.com/Allsupinc. The information provided is not intended as a substitute for legal or other professional services. Legal or other expert assistance should be sought before making any decision that may affect your situation.
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